Major Banks and Fintechs Join ‘Stablecoin Gold Rush’ as Adoption Soars

Some of the world’s largest financial institutions and payment processors are rushing to develop their own stablecoins, seeking to capitalize on a rapidly growing market for digital currencies pegged to traditional assets like the US dollar. This surge in interest comes as regulatory clarity emerges and as transaction volumes in the $210 billion stablecoin market continue to climb.

Bank of America signaled last month it was open to issuing its own stablecoin, joining established payment providers like Standard Chartered, PayPal, Revolut, and Stripe in targeting a business currently dominated by cryptocurrency groups Tether and Circle, according to Financial Times.

“It’s about people selling shovels in the stablecoin gold rush,” said Simon Taylor, co-founder of fintech consultancy 11:FS, who likened the trend to FOMO (fear of missing out). “The other thing that’s driven it is there’s real volume,” he added, noting that founders want to secure a position before stablecoin regulation is finalized.

Market Growth Accelerates

The enthusiasm has been fueled by growing regulatory acceptance worldwide and has received further impetus from US President Donald Trump’s embrace of cryptocurrencies. Transaction volumes for stablecoins climbed to $710 billion last month, compared with $521 billion in the same period a year ago, while the number of unique stablecoin addresses has risen 50 percent to 35 million over the same period, according to data from Visa.

Currently, about $142 billion worth of stablecoins have been issued by El Salvador-based Tether (USDT) and $57 billion by US-based Circle (USDC), together accounting for the vast majority of the global market. However, new entrants are making significant moves to establish themselves in this space.

Highlighting the momentum in this sector, crypto payments firm Mesh announced on Tuesday it has raised $82 million in Series B funding to expand its stablecoin-based payments settlement network globally. The round was led by Paradigm, with participation from ConsenSys, QuantumLight, and several other investors, as reported by CoinDesk.

Notably, most of the capital raise was settled in PayPal’s PYUSD stablecoin, underscoring the growing legitimacy of these digital currencies for significant financial transactions.

"We are going to keep the U.S. the dominant reserve currency in the world and we will use stablecoins to do that." – @SecScottBessent, Treasury Secretary pic.twitter.com/jvfEFtFyap

— Eco (@eco) March 8, 2025

Practical Applications Expanding

While stablecoins have typically been used to move money between different cryptocurrencies, they are increasingly being adopted in emerging markets as an alternative to local banking systems, particularly in sectors like commodities, agriculture, and shipping.

These digital tokens act as a de facto reserve of sovereign currency—predominantly US dollars—allowing companies and consumers to cheaply and instantly access hard currency outside the traditional banking system. According to Investopedia, stablecoins maintain their value by holding reserve assets as collateral or through algorithmic formulas designed to control supply.

Major corporations have already begun integrating stablecoins into their operations. Elon Musk’s SpaceX uses them to repatriate funds from selling Starlink satellites in Argentina and Nigeria, while AI company ScaleAI offers its large workforce of overseas contractors the option of being paid in digital tokens.

Stablecoins and Real-World Assets (RWA) are booming despite a shaky crypto market!

– Stablecoins hit $224B (+10%)
– RWAs surge to $17B (+17%)
– Private credit reaches $12B with a 10% yield

UTILITY ASSETS WILL BE EXTREMELY VALUABLE. Don’t sleep on them. pic.twitter.com/2q8T7M9Q9W

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Regulatory Landscape Evolving

Banks and financial institutions are growing increasingly confident about entering the stablecoin market as regulations take shape. US politicians are currently debating bills in Congress that would set standards for stablecoins, giving various stakeholders more confidence to use the tokens.

“If they make that legal, we will go into that business,” commented Brian Moynihan, chief executive of Bank of America, regarding the Trump administration’s plans at the Economic Club of Washington last month.

The European Union introduced rules at the beginning of the year requiring stablecoin operators in the bloc to be compliant, while the UK financial regulator is planning to consult the market this year. Standard Chartered announced last month it will lead a venture planning to launch a Hong Kong dollar-backed token under new incoming stablecoin regulations in the territory.

Industry Competition Intensifies

The rapidly evolving landscape has prompted even traditional fintech holdouts to reconsider their stance on digital currencies. “OK. I give up. Klarna and me will embrace crypto! More to come… Last large fintech in the world to embrace it. Someone had to be last. And that’s a milestone as well of some sort,” Sebastian Siemiatkowski, chief executive of ‘buy now, pay later’ lender Klarna, wrote on X last month.

Meanwhile, payments giant Stripe completed its largest acquisition to date last month with the $1.1 billion purchase of stablecoin platform Bridge. “Stablecoins and the more modern chains are really interesting for the payments use case, and that makes up our business,” said co-founder and president John Collison. The $91.5 billion financial technology company processed $1.4 trillion in payments last year.

PayPal, which already has a stablecoin named PYUSD pegged to the dollar, plans to roll out the payment option more widely in 2025 and expects particularly strong adoption among US businesses paying suppliers abroad.

Challenges Remain

Despite the enthusiasm, new entrants face significant challenges in establishing themselves. PayPal has enacted just $163 million of transactions this month compared with just over $131 billion at Tether, according to Visa data. Last month, approximately 122 million transactions took place globally using stablecoins—a fraction of the 829 million transactions that occur daily on Visa’s network alone.

Analysts warn that the market is unlikely to sustain dozens of coins as users begin to scrutinize the quality of the companies issuing them. “Essentially what the brand of the stablecoin tells you is who the issuer is,” Taylor noted. “Therefore, because the issuer is that organization, your credit risk is X or Y. That’s not something you do with the dollar.”

As regulatory frameworks continue to develop and adoption increases, the stablecoin sector appears poised for significant growth—though which players will ultimately dominate this evolving landscape remains to be seen.